When Tim Westergren returned in March 2016 to Pandora Media (P) , the music streaming operator he co-founded in 2000, his first order of business as CEO was to send emails to the heads of the country's three major music labels.

For much of the previous five years, the relationship between Pandora and the major labels had been peppery at best. Court cases, legislative standoffs and finger pointing permeated their battles over music licensing fees. To remedy the situation, Westergren was intent on finding common ground so that Pandora could finally launch an on-demand streaming service that allows users to pick their songs.

A year after Westergren's return to a post he last held in July 2004, Pandora has a subscription-based platform to go along with its internet radio services.

But although the new subscription-based Premium has generated positive reviews, its arrival may be too late for Pandora to survive as a standalone company. Though Westergren has acted quickly over the past 14 months, Pandora spent many years focused almost entirely on growing its advertising-supported free radio service while Spotify and then Apple (AAPL - Get Report) were signing up millions of monthly paying subscribers for on-demand platforms.

"For a long time, there was a belief that the ad-supported radiolike model was the superior way to go," said Russ Crupnick, managing partner at industry consulting firm MusicWatch. "And there are a lot of users who still prefer that kind of model. But the fact is you've had this surge in on demand, which of course offers a very different experience."

Subscriptions also are proving to be a more stable and profitable business model than relying on advertising. Spotify has amassed more than 50 million on-demand subscribers, and Apple Music said it had more than 20 million subs as the end of 2016. Pandora, meanwhile, completed its rollout of Premium last month and said it has attracted about 500,000 trial subscriptions for the $10 per month service since March. 

Whether Pandora Premium can turn the money-losing company into a profitable music-streamer remains to be seen. But by having to turn to private equity firm Kohlberg Kravis Roberts (KKR - Get Report) last week for $150 million in financing, Pandora signaled that it needs cash to sustain its operations. Afterall, Pandora burned $241 million in cash last year. At some point, you just run out.

The KKR investment is designed to give Pandora time to build Premium as well as its concert-ticketing business, Ticketfly. But the company's board of directors is moving quickly to consider a range of "strategic alternatives," to use banker jargon, including a possible sale.

Westergren, who in the past has resisted selling the company, is said to be more open to it now. Pandora declined to comment for this story, referring only to statements tied to the KKR investment and board changes.

Pandora, which has been in the red for nine consecutive quarters, will add Richard Sarnoff, a KKR managing director, to its board of directors. Sarnoff was an executive at Bertelsmann when the German media company attempted to purchase Napster in 2002. He will work with Centerview Partners and Morgan Stanley, hired last year to advise Pandora. 

Though Westergren remains upbeat about Pandora's future, the KKR money highlights the limitations of an ad-supported radio business. Pandora's active listeners fell to 76.7 million at the end of March from 79.4 million for the same period a year ago. Total listening hours dropped as well, slipping to 5.21 billion from 5.52 billion during the first quarter of 2016.

Fewer listeners has meant slowing growth in ad sales, which accounted for 71% of revenue in the first quarter. Advertising revenue rose 1% to $223.3 million in the quarter. 

"Pandora still does what it does very well," said Paul Verna, a music industry analyst at eMarketer. "But their piece of music streaming hasn't grown as much as on demand has. And now that they've come around to that realization, the fact is, they're somewhat late." 

It wasn't always this way. 

Pandora along with early pioneers such as Rhapsody were among the first wave of internet companies to develop sophisticated algorithms to match listener tastes with music they'd probably like. When the service debuted in 2004, it was lauded for delivering songs to users that obviated the need for dial turning. The Stanford-educated Westergren, himself a musician, called the technology behind the service the Music Genome Project, and its early popularity seemed magical.

Pandora held its initial public offering in 2011, raising $234.9 million after opening at $16 per share. Westergren would later cash out part of his holdings, making himself a millionaire many times over. Pandora's stock, meanwhile, climbed as high as $40.44 in March 2014.

But as the company won over millions of listeners, Pandora clashed with the major music labels as well as songwriter federations over licensing fees levied on internet broadcasters (as opposed to radio operators). While music industry players argued that they weren't being fairly compensated, Pandora showed that it was paying more than 60% of its revenue to those same artists and songwriters. You can't get blood from a stone, Pandora was saying.

With compromises seemingly out of reach, Pandora under previous CEO Joe Kennedy lobbied Congress in 2013 to pass the Internet Radio Freedom Act, an attempt to get legislators to force the U.S. Copyright Royalty Board to lower fees. When that effort fizzled, Pandora purchased a small radio station in Rapid City, S.D., in an attempt to skirt the royalty board by securing lower rates afforded terrestrial broadcasters.

The labels cried foul. Lawsuits, countersuits and out-of-court settlements soon followed. By failing to secure direct licensing agreements with the major labels, Pandora was unable to expand its ad-supported radio service outside of the U.S., apart from New Zealand and Australia. Pandora's recent financial results served to underscore that its U.S. audience for internet radio appears to have topped out at 80 million.

"Pandora's ad-supported business just doesn't scale very well," Verna said. "They have had very high licensing costs, fixed costs. And though that business is still robust, growing revenue has become much, much harder."

Meanwhile, Spotify was taking a very different route. Soon after it launched in 2008, Spotify CEO Daniel Ek secured equity investments from the major labels: Universal Music, a unit of Vivendi (VIVHY) ; Warner Music, controlled by Ukraine-born businessman Leonard Blavatnik; and Sony Music, a unit of Sony (SNE - Get Report) . Rather than starting the service in the U.K. or the U.S., Spotify began in Sweden and moved to other smaller European countries, demonstrating to the labels that subscription-based streaming could save an industry wracked by pirating.

"Ek made all the deals, he approached the labels, he brought that post-Napster type of culture to the labels, showed them how to use playlists," said Joe Rapolla, a former Universal and Warner executive who directs the Music Industry Program at Monmouth University. "He just made it a lot more understandable for the labels to see how things were going to play out."

Anxious to play catch-up, Pandora under former CEO Brian McAndrews, hired in 2013 to replace Kennedy, spent $75 million in 2015 to acquire the intellectual property of Spotify rival Rdio out of Chapter 11. In retrospect it's easy to see that the Rdio acquisition was a tacit omission that Pandora had missed the boat for on-demand streaming -- and that it badly needed a jump-start.

Pandora Premium, based on Rdio's technology, enters a market crowded by large and well-established leaders. In addition to Spotify and Apple Music, Amazon (AMZN - Get Report) has stepped up its own music offerings. And then there's Alphabet's (GOOGL - Get Report) YouTube, which swallows millions of hours of listening much to the chagrin of labels, artists and songwriters.

Spotify recently hired Goldman Sachs, Morgan Stanley and Allen & Co. to explore a direct listing for shares that the company hopes will valued it at $13 billion.

To be sure, Spotify and Apple haven't always gotten along with the music industry. But through carefully orchestrated celebrity diplomacy, they were able to bring in high-profile holdouts such as Metallica, the Beatles, Led Zeppelin and Bruce Springsteen. 

While Pandora pushes Premium, Westergren faces an ever-more-difficult advertising environment. As all media companies have discovered, marketing dollars are increasingly going to digital, and most of that spending is going to just two companies: Google and Facebook (FB - Get Report) . Not only must Pandora compete with Spotify and Apple for on-demand subscribers, it must attract ad buyers at a time when Google and Facebook have become all-omnipotent. 

Pandora's strength remains its high name recognition and those nearly 80 million listeners. Those are certainly two points that Westergren and his board will be pushing as they speak with prospective buyers. 

One potential acquirer is Sirius XM (SIRI - Get Report) , the satellite TV operator that leveraged early deals with carmakers to grow a business that reported it ended 2016 with 31.3 million monthly subscribers.

Yet Greg Maffei, Sirius' chairman and CEO of Liberty Media, which controls the company, has chided Pandora for entering the on-demand market. Competing directly with Apple, Amazon, Google and even Spotify is a fool's errand. In February, Maffei said Sirius might consider buying Pandora if shares fell to $10.

Pandora stock on Monday afternoon was up 4 cents to $9.86, but the shares remain off more than 24% in 2017. 

Besides rivals Spotify, Apple Music or Jay-Z's Tidal, which sold a 33% stake to Sprint (S - Get Report) earlier this year, companies such as iHeartMedia (IHRT) or Facebook might be interested in a deal, Verna said. (That said, iHeartMedia may be headed to bankruptcy court if it cannot increase investor support for a debt swap, making an acquisition seemingly unlikely.) Entertainment and digital media companies are looking to generate more traffic, and music is one way to get there. A wireless carrier such as Verizon (VZ - Get Report) also might have interest in Pandora, he said.

After a meteoric rise, and a slow return to earth, Pandora's future as a standalone company may be coming to an end.

"It's easy to envision how one of those companies would want to acquire Pandora's assets," Verna said. "If Pandora comes out of this with a sale or something that preserves the brand, that's a good outcome."

Jim Cramer and the Action Alerts PLUS team have some thoughts about what's moving Cisco (CSCO - Get Report) shares. Find out what they are telling their investment club members by getting a free trial subscription to Action Alerts PLUS.